The Need For Clean Energy Fuel Cell Buses In China - Market Update

China's rapid economic expansion over the past decade has resulted in a public concern regarding deteriorating levels of air quality.

VANCOUVER, CANADA – China's rapid economic expansion over the past decade has resulted in a public concern regarding deteriorating levels of air quality. The China State Council is investing 1.8T Yuan (US$288 billion) in the renewable energy industry over the period 2010-15, along with 2.3T Yuan (US$368 billion) on actions designed to save energy and reduce emissions.


Background
Given the size and rapid growth of China's economy, the country has considerably larger carbon dioxide emissions than other nations, including the U.S. For example, China's carbon dioxide emissions from fossil fuels accounted for 28% of the global total in 2011 versus 16% in the United States. And, the International Energy Agency estimated 3.8% further growth in China's emissions last year.

As a result, last month China's State Council announced that the energy saving sector will be a key pillar of the economy by 2015. The majority of environmental protection industries are expected to receive government funding in an effort to stimulate innovation in a wide range of technologies addressing air, water and soil pollution. A recent joint statement of the National Development and Reform Commission and the Finance, Science and Industry Ministries announced that fuel cell buses will now qualify for rebates up to 500,000 Yuan (US$81,000).

Bus Transportation in China
China's growth has spawned the largest commercial vehicle segment in the world, in terms of production and domestic sales – including 7% year-over-year growth in the manufacture of city buses, to almost 74,000, in 2011. Naturally, this growth has resulted in high levels of automotive emissions, with the International Council on Clean Transportation reporting that auto emissions contribute more than 33% of the air pollution in Beijing, Shanghai and Pearl River Delta Region.

Beijing's city government wants to expand public transit while also reducing the number of vehicles in the city. As a result, it unveiled new measures this month that place tougher restrictions on the number of new vehicles allowed on the roads each year going forward. By the end of 2017 the government will cap the number of cars on the road at 6 million. Beijing also aims to reduce total vehicle fuel consumption by promoting the sale of new energy vehicles – including the use of subsidies – while also encouraging people to drive less frequently.

Ballard Fuel Cell Power Modules
Earlier this year, Ballard signed a memorandum of understanding (MOU) with our partner, Azure Hydrogen Corporation of Beijing, extending our partnership to include fuel cell buses in order to help address the air quality issue in China.

Azure plans to develop fuel cell bus capabilities in China with Ballard's technical support and funding from Chinese sources, including both private investors and various levels of Government. Ballard fuel cell power modules are currently powering zero emission fuel cell buses in public transit service across a number of sites in North America and Europe.


About Ballard Power Systems
Ballard Power Systems (TSX: BLD) (NASDAQ: BLDP) provides clean energy fuel cell products enabling optimized power systems for a range of applications. Products deliver incomparable performance, durability and versatility. To learn more about Ballard, please visit www.ballard.com.

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